NEW YORK, May 16 (Reuters) - Global equity markets eased on
Friday as concerns about future economic growth weighed on share
prices on Wall Street, while government debt prices fell on
surprisingly strong U.S. housing data.

A monthly gauge of U.S. consumer sentiment fell in May as a
gloomy view on income growth clouded an otherwise positive
economic outlook, a preliminary reading of the Thomson
Reuters/University of Michigan's survey showed.

But data showed U.S. housing starts jumped in April and
building permits hit their highest level in nearly six years,
the Commerce Department said, in a report that offered hope the
troubled American housing market could be stabilizing.

The sentiment data provided fodder to those who expect the
economy to struggle in the second half of the year, while the
housing data bolstered those who see stronger growth ahead.
Weighing on that tug-of-war were expectations of a market
correction.

"We're willing to concede that for a host of reasons, these
questions about economic growth, all these geopolitical risk
issues, whatever, we can absolutely have a 5 or 10 percent
correction in the summer," said Phil Orlando, chief equity
market strategist at Federated Investors in New York.

"That's what the market has been attempting to price in with
this defensive rotation that's been going on for two and a half
months now," said Orlando, who remains bullish about stocks.

MSCI's all-country world index was down 0.05
percent, falling for a third day and further retreating from a
high set on Thursday. The pan-European FTSEurofirst 300 index
closed up 0.3 percent to 1,361.54 points.

The Dow Jones industrial average rose 0.51 points to
16,447.32. The S&P 500 gained 0.97 points, or 0.05
percent, to 1,871.82 and the Nasdaq Composite dropped
5.848 points, or 0.14 percent, to 4,063.445.

The Russell 2000 index of small-cap companies briefly
entered correction territory on Thursday, defined as a 10
percent decline from a recent high. It subsequently pulled back
and was 9.8 percent below its high in morning trading on Friday.

"We're in the middle of a rolling sector correction, where
some areas of the market are performing better than others,"
said Jerry Harris, president of asset management at Sterne Agee
in Birmingham, Alabama, who noted that the S&P 500 hit an
all-time record on Tuesday.

U.S. Treasuries prices fell after the better-than-expected
housing data pointed to a strengthening economy, pulling
benchmark 10-year yields up from six-month lows.

Benchmark 10-year notes were last trading almost
flat to yield 2.5035 percent.

The dollar held steady against major currencies as selling
of the currency faded with benchmark U.S. yields stabilizing at
their lowest levels in six months.

The dollar traded at 101.46 yen, down 0.1 percent,
and above a two-month low of 101.31 yen set on Thursday.

The greenback rose against the euro, trading at $1.3700
, up 0.07 percent.

Brent crude oil rose above $109 a barrel after a recovery in
Libyan oil supply proved short-lived and as tension simmered
over Ukraine.